In these examples, you can see that after all the essential household expenses have been met, there is not enough money from the balance (£300) to cover the current debt repayments (£490).
This list, or financial statement, will play a vital role in clearing your debts. Not only does it show your creditors (or even a court) that you are treating the situation seriously, but it also demonstrates clearly how much you can afford to repay (if anything) every month.
Ensure that you don't leave anything out of this budget - you must make sure that your essential priorities are met. This means that you need to include costs such as providing the children with school uniforms, and making sure that your house is adequately heated. The courts agree that these payments have a much higher priority than a consumer debt, and the credit agencies and debts collectors know that this is the case. If you have prepared a fair and sensible financial statement, and show you really can only afford to pay a creditor as little as £1 per month, then that is probably all you will end up paying.
However, be sensible - nobody is likely to support your decision to spend £500 a month on eating out in restaurants, or on cigarettes and alcohol - your debts are more important than your social life.
Once the task of listing all the debts is complete, the hardest part is over. The next step is to prioritise your debts, then start to contact everyone you owe money to, to arrange a suitable repayment schedule.
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